Some conventional systems allow credit card processing companies to uniquely identify types of merchants. Once identified, specialized processing can take place for those merchant types. Such systems focused on the merchant relationships with card issuers, merchant acquirers, or both. The original intent of these relationships was to characterize a transaction for an appropriate interchange fee.
An “interchange fee” is a fee that is paid by an acquirer to an issuer for transactions that are processed. An “interchange” process is the standardized electronic exchange of financial and non-financial data associated with sale and credit data between merchant acquirers and card issuers. The interchange process typically occurs at the end of the day, after all financial transactions for that day have been completed. It is part of the clearing and settlement part of the payment process, as opposed to the authorization part of the payment process. These two parts of the payment process are described in detail below.
Since different types of merchants may sell goods or services of different values and different volumes, different interchange fees may be appropriate for different merchants. In such conventional systems, a transaction processing system may use a merchant identification value to identify the particular type of merchant that is performing a particular transaction and to assign a proper interchange fee to that transaction. For example, restaurants may be entitled to a lower interchange fee than car dealers, since restaurants typically generate more credit and debit card transactions than car dealers. Car dealers may be assigned one identification number and restaurants may be assigned another identification number. The identification number can be used by a central computer to identify the type of merchant associated with a transaction so that an appropriate interchange fee can be applied to the transaction.
Others have described the use of merchant values to distinguish between authorized and unauthorized merchants. For example, U.S. Pat. No. 5,956,695 describes the use of a merchant identification value in an authorization process in a debit card reward redemption process. In the redemption process, a participant may use a debit card at a particular merchant to redeem points and conduct a transaction using those points. At that particular merchant, the merchant identification value may be sent to a filter processor with an authorization request message. The filter processor may then use the merchant identification value to determine if the merchant is an authorized merchant (i.e., one that is participating in the reward redemption process). This is done as a fraud prevention and verification measure.
Although merchant identification values have been used and described in the credit card industry, they have not been used in conjunction with specific merchants and with specific consumers. They have also not been used to provide immediate feedback to a consumer at the point of sale.
It would be desirable to provide for improved systems and methods that can encourage the use of portable consumer devices such as credit cards or debit cards.